China Pollution Tax Plan Submitted to Cabinet, Daily Reports

China’s tax department has proposed
a pollution levy to the cabinet, a move that may increase raw-
material prices, the Economic Information Daily reported, citing
an unidentified government official.

The plan covers discharge of sulfur dioxide and waste water
and excludes carbon emissions, the newspaper, an affiliate of
the official Xinhua News Agency, said today, without specifying
the rates. The proposal is aimed at a “smooth transition” from
a discharge fee that’s currently used, according to the report.

Increasing concerns about pollution have led to
confrontations between local governments and residents,
including a protest last month in the southwestern city of
Shifang over the construction of a molybdenum copper plant. The
government is stepping up measures against industrial accidents
after ConocoPhillips (COP), part-owner of China’s biggest offshore
oilfield, last year caused the country’s worst spill since
PetroChina Co. (857) leaked oil in Dalian in 2010.

Questions faxed to the State Administration of Taxation by
Bloomberg News didn’t get an immediate response.

The pollution tax may add pressure on coal-fired power
utilities, building-material companies and steel and metal
producers to increase prices to help cover higher costs, the
newspaper reported, citing Wang Jinnan, vice president at the
Chinese Academy for Environmental Planning.

An acid leak at Zijin Mining’s copper and gold mine in July
2010 poisoned enough fish in the Ting River to feed 72,000
people for a year. Dalian’s beaches and port were closed by an
oil spill by PetroChina at the nation’s largest crude terminal.

China may invest 346 billion yuan ($54 billion) in the five
years through 2015 to prevent pollution of “key” water
sources, China Securities Journal reported May 18, citing a
joint statement from the environmental protection, finance and
water ministries and the National Development and Reform
Commission.